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The New Normal for Ad Tech and What the Future HoldsMedia consumption data is flooding in from platform players around the worldas everyone takes stock of the terrifying COVID-19 pandemic, and thedestruction it is wreaking on the global economy.The current hope in digital advertising is for a V-shaped advertising spendrecovery in the fourth quarter and into next year. Even so, the latest datafrom the US and UK indicates that this faithful optimism could be short-lived.It’s a worrying time for everyone, everywhere. In the meantime, at thecoalface of digital advertising, the industry must pay close attention tomyriad issues if we are to emerge into a better world in 2021 and beyond.Every business is going through a risk assessment process right now. So, whatare some of the key challenges facing all of the players in the digitaladvertising market?## Cashflow and payment termsWith extended payment contracts coming into force, and an overall slowdown inadvertising spend, there is a risk that some ad tech companies might not makeit out of the other side.The immediate issue is liquidity in the supply chain. Thirty-, 60-, and 90-daypayment terms are common in the industry and many companies will benegotiating to extend these as far as possible to 90 days or more. For thosewithout strong balance sheets, they will quickly face cash flow issues whichwill be very challenging to manage. We’re already seeing several companieslook to soften the impact by taking drastic cost-cutting measures now.If one partner in the ad tech supply chain goes down, this can have big knock-on effects on other partners. We saw this when Sizmek filed for bankruptcy,owing huge debts to Index Exchange, PubMatic, OpenX, and AppNexus. Arecompanies contingency planning for this and looking to cut ties with theweakest links? My view is that the industry cleanout is likely to be furtheraccelerated.Many digital advertising industry players have already taken measures to limitrisk exposure through contract updates or insurance provisions. Companies willcontinue to review partner contracts to ensure they have mitigated risk andmonitor lines of credit to be ready to react with immediate actions to any redflags. Our industry is constantly evolving, and many of the weaker companieshave already been weeded out of the ecosystem. I would expect many smallerless transparent players to quietly fall by the wayside.## Ad tech consolidation and fraudHaving a clear differentiator with market-leading tech and superior service istable stakes during economic recessions. Our strategy is to focus on existingrelationships and look after our loyal customers during this time. Thosecompanies with broad appeal, and who operate in a growing market, will be mostresilient. With global lockdowns, we are seeing consumption surges of premiumonline publishers (news, entertainment, and lifestyle), over-the-top (OTT)streaming platforms, gaming, and audio.A number of these areas were experiencing accelerated adoption pre-virus, andthere will be benefits, eventually, for platforms in these areas. Nicheoperators focused on key verticals that are currently under pressure willthemselves be under real pressure as they can’t diversify their offering orclients so readily.There have also been reports of a rise in malware and fraud during COVID-19,as audiences flock to online environments. There is a risk of losing focus onhygiene factors amid the rush to move money to digital. The trick is to stayvigilant and invest in robust technology. New bot and fraud schemes, like therecent IceBucket CTV scheme, will be discovered. The industry needs toescalate its defences.## PerformanceThis is a good time to be working with publishers that provide a breadth ofpremium content. Whilst traffic to news is spiking right now, consumers arealso staying to browse non-news content in large numbers. Feedback from majorpublisher networks has shown they are experiencing double-digit page view andunique user growth for their lifestyle and entertainment content, which offera more “protected” environment in which to advertise. We’ve always maintainedthe importance of supporting an independent publisher ecosystem to enable themto invest in quality editorial and fact-checked journalistic content. They’vereally stepped up to the plate during this crisis and advertisers need tosupport them rather than retreating to the walled-gardens.For OTT platforms and streaming video publishers, there isn’t the samechallenge for brands, as these platforms offer carefully curated professionalcontent heavily focused on lifestyle and entertainment. With the surge in OTTviewership, they offer ideal environments for more sensitive brands. As shouldbe the case at all times, brands should ensure they are qualifying theirinventory sources with fraud guarantees in place, utilising privatemarketplaces, and putting the necessary protective measurements in place to beable to monitor and react quickly.Our objective is to focus squarely on delivering premium targeted videoaudiences to brands, and ensure the metric outcomes are solid in areas such ashigh viewability (80%+), high completed view rate (80%+), a high percentagerate of on-target audiences and strong brand uplift performance.## Technology innovationA crisis state can be a catalyst for innovation. Leading companies will beadapting to the present with eyes firmly focused on a post-virus world. Onething the current crisis has created is the bandwidth to focus on existingstrategic initiatives. You’ll see many firms emerge more advanced in theirpreparedness for the cookie-less world as they have more time to focus on thefuture.The key evolutionary milestones that lay ahead of us in the ad tech industrystill apply irrespective of the virus. More effective and efficientprogrammatic monetisation will remain number one on the agenda.However, the unfortunate reality of uncertainty is the human tendency torevert back to the status quo. Walled gardens will naturally benefit in thisscenario as brands seek a ‘safe bet’ when marketing budgets are rationalised.However, it’s important for brands to hold their nerve. In recent years manyadvertisers and their agencies had spent considerable effort to diversifytheir video strategies, understanding that a broader media mix allowed them toreach new audiences and benefit from the plethora of brand-safe, trustededitorial and professionally produced content environments available. Brandswant easy execution, targeted reach and frequency, and the ability to quicklyreach audiences on new channels. We have to help them do that.## The future for ad tech beyond 2020The jury is still out on how much will actually change around the world afterthe pandemic storm eases. Programmatic advertising needs to work harder tosell the benefits of efficacy in targeting audiences with the right message,and demonstrate clearly the benefits of reducing media wastage. The industryneeds to show that if brand advertisers want to pivot their spend to high-usage content segments, that it can deliver true performance in the form ofsales uplift and brand awareness.For the ad tech industry, and video in particular, shifts in consumerbehaviour will accelerate pre-existing trends like the cord-cutting rate andgrowth of advanced video-on-demand platforms. At the moment, crystal ballingshould be shelved, as it’s too early to see what the seismic changes will be.What is certain? The severity of the recession will accelerate therationalisation of the industry and increase consolidation, benefiting thecompanies with the best technology, slick service, and robust balance sheets.About the authorIlda Jamison is the Manager Director, Australia and New Zealand at SpotX. Withover a decade of experience in the programmatic industry, Ilda leads atalented team driving business growth in the most advanced digital videomarket in APAC.